When doing business online, you are just one entity in a very large crowd. Standing out can be difficult, with companies spending thousands to figure out how to do just that. Fortunately, any digital marketer can stand out with the right tools and strategies. One of them is fundamental to how most online services are marketed today – the offer.
The Free Offer
Behind every business is the belief that they have something valuable, that others will want to own or experience. Before any pitch can take place, you need to get their attention first. This is easier said than done when hundreds of other businesses are vying for the same thing.
If you run a business where the product can sell itself, sometimes that’s the best thing to do. That’s where the free offer comes in, a limited experience of what you’re selling. The biggest and smallest online companies do this, including Amazon when they pester you about free Prime membership. One of Britain’s biggest online entertainment sectors is iGaming, where offers are given out frequently to drum up interest. Once again, it isn’t just the small fry doing this, with industry leaders like Paddy Power Games offering 50 to 100 free spins on their games. If people like what they get from the offers, they’re more likely to stick around after they’ve been used up. Even if they don’t, their interactions with the site can provide valuable SEO juice, boosting smaller websites in the rankings.
When a business model can make free offers with little to no cost, it becomes a win-win marketing strategy that sources customers at best and improves website traffic at worst. Offers like these pre-date the internet, with physical businesses offering free samples, etc. However, it’s much more cost-effective for online businesses than those selling products. For products, discounts and generous return periods can achieve similar results.
The Reciprocity Instinct
Free offers are a great way for businesses to engage customers because it’s a good-faith gesture that, for many, signals the first half of a transaction. There’s no guarantee that the business gets an individual’s custom when the offer ends, so customers view this in two ways. First, the business is confident in what they’re selling and second, it’s respectful of the customers’ time. The free offer essentially ‘buys’ the possibility of satisfying new audiences.
For many consumers, there is a strong urge to close the transaction by trying the offer out. This reciprocity is a known factor in economics, best shown by the zero price effect where interest in free products outpaces cheap products. To close the transaction, consumers try the offer out and then leave, no strings attached. Some, however, will come back. That’s why free offers work.
Viability In Saturated Markets
There have been times when free offer systems have been cut out from a business model, so when don’t they work? Perhaps the biggest example of a free offer being scrapped was when Netflix stopped offering free trials. This came after wowing investors for nearly a decade with significant subscriber growth, which then slowed down and plateaued.
That’s why the free offer was scrapped – the confidence game surrounding streaming markets ended when Netflix suddenly had 10+ competitors to deal with. With subscribers not growing as much anymore and free offers not contributing to valuable investor-friendly metrics, they had to focus on profitability. Hence, no free offers and less password sharing, to get profit out of every user instead of allowing a significant portion of them to use free trials. This confidence game strategy is common in Silicon Valley, at least in the short-term.
For most businesses that turn a profit, however, reinvesting a portion of that into the offer can be a powerful marketing tool. As said above, it was a marketing tactic before the internet – that isn’t changing for the foreseeable future. There will always be interest, and value, to be gained from a free offer, for both businesses and their customer bases.
